Post

The Coming Crisis in Electricity Generation

For more than 100 years electricity generation and distribution systems have evolved to become one of the most reliable services imaginable - one which has been the foundation of the industrial expansion and prosperity of the developed world. Our society is totally dependent upon this and even relatively short and localized interruptions in the power supply (for example during the Sandy superstorm) cause major disruptions to everyday life.

The reliability of the system depends upon a rather delicate balance of supply and demand that varies throughout the day and throughout the year.

Huge thermal base-load steam turbine generation plants that can reliably provide the same power output 7x24x365 are the foundation of the system in most parts of the world. Historically these have been fueled by coal which generates "dirty" (in some cases toxic) ash and a lot of CO2. More recently single cycle and combined cycle natural gas plants have played an increasingly important role. These plants are cleaner and much more efficient than coal plants in that they transform more of the energy generated by combustion into electricity. The disadvantage of these plants is that natural gas has historically been much more expensive than coal.

In regions where there are large rivers that drop hundreds of meters in a relatively short distance it is possible to build hydro facilities. These were the earliest source of large scale electrical generation and are still used extensively. Unfortunately, most of the best hydro locations in the world have already been developed.

Starting in the 1950's nuclear plants were added to the mix and generate a significant percentage of electricity in many countries (the highest being 75% of electrical output in France).

These base-load plants are designed to run all the time at a relatively constant output receiving a fixed price for the electricity generated. That is how they run most efficiently and a constant and predictable revenue stream underlies the calculations used to get the building of these plants financed and the operating costs paid. In most cases the payback on these facilities is achieved only after many years of operation.

When electrical demand starts to peak in the late afternoon and evening peaking plants come into play. These are typically single cycle natural gas turbine plants that can come on-line in a matter of 15-20 minutes or less. Because they run only during peak demand times the expectation is that the electricity they generate will command a higher average price. It is also assumed that they will be able to generate revenue most days although that varies with time of year and the weather. For example, very hot summer days and very cold winter days will result in higher peak demand than moderate days in spring and fall.

This complex balance of base-load and peaking power plants has been in place for decades and has resulted in a very reliable electricity supply. The most common source of power outages are storms that bring very strong winds, knocking down trees and branches that take down overhead electrical lines.

Over the past decade that balance has been disrupted by the introduction of renewable energy sources such as solar and wind. These are both unreliable in the sense that it is not possible to match supply with demand, and highly variable due to passing of clouds in the case of solar or frontal weather systems for wind. As an example, on Christmas day, 2012 Texas set a new wind generation record of 8.638 GW (26% of total supply) for a few hours. The very next day across the whole of Texas there was essentially no wind generated electricity available for 6 consecutive hours.

In most jurisdictions renewables are given priority access to supply the electricity grid regardless of whether or not there is demand. In order to balance supply and demand thermal generating stations have to cut back output, electricity is exported to neighbouring jurisdictions (typically at very low prices) or hydro stations "spill water" by redirecting the flow from penstocks to spillways.

As long as renewables made up a relatively small portion of total generation capacity the physical problems could be handled. But the economic issues are now coming to the fore as the development of renewables continues.

With base-load and peaking thermal plants now sitting idle (as spinning reserves) for more and more of the time the economics of running these plants has been significantly eroded. Many of these plants are marginally profitable or are actually losing money. There is no realistic hope that this trend will do anything but accelerate in coming years. As a result it is becoming increasingly difficult to get financing for the construction of new thermal generation plants.

In the United States the situation is particularly dire. The MACT regulations issued by the EPA in December, 2011 will result in the closure of many older coal-fired plants (estimates run as high as 34 GW of capacity or more). Plans to replace this capacity are both vague and uncertain. For example, Georgia Power's announcement that 2 GW of coal-fired capacity would be shuttered by 2015 was justified by the addition of 2 nuclear powered plants in 2017 - plants which may well run into significant construction delays. What happens between 2015 and 2017 (or later)?

Texas already has inadequate electrical generation reserves as highlighted in a strongly worded letter from the North American Electric Reliability Corporation. In an effort to get utilities to build new base-load generation facilities the Texas regulator (ERCOT) is raising the maximum peak price for electricity to $9,000/MW-Hour. The hope is that if you let a base-load plant charge 170x the average annualized price for the few hours that it is not idle then construction of the plant still makes sense. Call me a skeptic but I have to say "that dog don't hunt."

Beyond supply and reserve issues the economic disruption caused by renewables is producing some very strange consequences; in "green" Germany coal-fired plants are being used in preference to cleaner, more efficient gas-fired plants due to costs; in Ontario they are spilling water at "green and renewable" hydro dams in order to make room for "green and renewable" wind generation; the Danes end up using Swedish nuclear-generated electricity when the winds are calm even though they banned nuclear power generation; in Texas they are selling wind energy at negative prices almost 10% of the time because Production Tax Credits provide a profit.

Declining reserve capacity and uncertainty regarding the economics of new thermal plants will destabilize the electric grid. Rolling blackouts and/or regional grid failures will occur on a more frequent basis. These are the unavoidable consequences of continued aggressive development of renewable generation.

There are public policy initiatives that could make the transition to renewables less risky and disruptive but these would take time to implement. However, I personally don't see any public support or political will to try and slow down the introduction of renewables in order to proactively protect the integrity of the electrical system, particularly in North America and Europe. Instead, I fear that we will have to experience repeated significant failures in the system before the scale of the problem is fully appreciated.

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Relevant article . . . author presented some interesting facts in regard to role of government in power generation. Government control and regulation of the generation and distribution of electric power has been problematic in most jurisdictions . . . quite often, state officials seek to realise a political objective and use electric power as the means to achieve such ends.

Ontario rejected clean coal power and shortly after they made it official, there was a breakthrough in clean coal technology . . . it can operate as cleanly as biomass at a fraction of the cost.

I am no great fan of government control in the electric power market . . . . politics in electric power causes more problems that it solves.

The highest energy bureaucrat in Sweden was a completel ignoramus who is now sharing his ignorance with the Japanese at some sort of research foundation in Tokyo. Renewables were preferable to nuclear for him because the people that he wanted to invite him to parties and dinners were just as ignorant as he is about energy economics.

The present Swedish energy minister told a half-baked Swedish physicist that renewables could take the place of nuclear, and he was to afraid to call her dumb, which she is in energy matters. When she was informed of the energy situation by the man that I hope will become prime minister of Sweden, she simply treated him as if he was the kind of parasite or charlatan that populates the Swedish academic world, and advises know-nothings like her.

About Germany. It is not coal but the electricity generated in surrounding countries that the Germans will use. At a conference last year a Belgium gentleman informed me that if Germany dumped nuclear, Belgium might have to ration electricity. Wrong solution, I told him. Just construct a reactor at the border with Germany, and charge the Germans the highest price in Europe for their electricity. As for Sweden, the correct thing to do is to tax exports of electricity. And as for Denmark, their lies about electricity should be exposed, before genuinely intelligent people in energy matters believe that their bet on wind makes sense.

Some of the colleagues dislike my choice of words, but a former environmentalist recently called Ms Merke's nuclear policy crazy. It is not crazy at all. By going green the lady has a better chance to be reelected, and once reelected can carry out the construction of nuclear facilities that she thought were essential about this time last year. Assuming that her strategy succeeds, she can serve another term as president of Germany, and afterwards perhaps replace the dummy now at the International Energy Agency, or the ignoramus at the International Monetary Fund. And if those two ladies are still at the helm of those two worthless organizations, somebody should tell her that it has been a long time since the movies of Marlene Dietricht and Romy Schneider helped me to pass the US State Department's exam in German, Unfortunately, nobody was around to help me pass the interview, although a Billy Wilder type comedy with Ms Mekel in the starring role might be something to see.

The discussions around the topics of renewable and non-renewable energy are always animated. It is certainly true that many bad decisions have been made, many people have gotten rich from government subsidies, and many established utilities have lobbied hard and often been successful at defending inefficient and polluting power generation stations.

Personally I try and keep things simple.

Regardless of whether or not human burning of hydro-carbons is changing the climate of this planet we can't keep doing what we have been doing for the past 100+ years. Oil and gas really are finite resources. Having worked in the oil patch for 20+ years I can tell you, without doubt, that we will continue to be able to find new oil and gas pools and we will be able to extract more resources from old oil and gas pools for many decades yet. And the tar sands will be in production for perhaps a hundred years or more.

The problem is that all of this new production will be much more expensive than the old production. So the overall cost of the resource will go up. I am also very convinced that we are reaching the point where daily production will not be able to grow as quickly as demand. Imagine if an additional 10-15% of the Chinese population could afford to drive a car. Same goes for India, Indonesia, and other developing countries. The moment daily demand exceeds daily production prices will escalate rapidly as the worlds starts to bid for that last barrel.

The other thing to consider is that burning oil and gas is not a very intelligent use of that resource. The entire plastics industry which we rely upon more and more is based upon hydro-carbon feedstock. If we do not steward the oil & gas resources more carefully the costs of plastic will also go through the roof. No more cheap MacDonald's toys ! (...wait maybe that is not a bad thing!)

Any way you look at it we need to stop burning hydro-carbons to generate electricity. So people that advocate development of wind and solar are correct.

My objection to the way renewables are being developed is that there is no overall plan, which to some extent I attribute to the last 30 years of deregumania.

I will state quite openly that when it comes to life-critical services like the provisioning of water and electricity I would prefer to trust publicly funded regulators charged with doing the best thing for everyone rather than market forces which are focused on short-term profits. Will they make mistakes? Yes. Will they be subject to political interference? Yes. But to paraphrase Winston Churchill I would say that regulation is the worst way to manage the development of energy resources, except for all those other ways that have been tried from time to time.

There are public policy initiatives that can transition us away from our dependence upon hydro-carbons. I have listed a number of these in my "Sustainable Energy Manifesto" at http://debarel.com/blog1/?p=152

Very good comment, Mr Swan, and I am glad that you are going to play a leading role in the discussion. If you look at what happened in 2008, when the oil price went into orbit, what happened was simply that demand outran supply, by which I mean actual supply, and not potential supply.

Of course, this was not understood by people who should have understood it, and so they made up fantasies about speculation. Incidentally, as far as I could tell, it was OPEC that put the nonsense about speculation into circulation.

The crisis might be even worse than Davis is forecasting if the EPA gets it way. Couple of examples.

1. Last year the Feds were proposing to limit CO2 emissions to 1000 lbm/MWh for new power plants, which effectively precludes new coal plants. Would have also excluded all new natural gas power plants as well. Huh? The proposed standard can only be met by the most advanced gas turbines (combined-cycle) running at full load and when "new & clean". Run the machines for a few months or reduce load and you violate the law. It gets better. Simple cycle gas turbines (used extensively for peaking) are not capable of ever meeting the proposed regulation.

2. This year, the EPA is proposing to apply current emission regulations to start-up of power plants. Starting up power plants is always at bit vexing at times and emissions are always more or less "off-scale-high". The proposed regulation would effectively guarantee the plant breaks the law every time you start the machines up. Swell.

My overall point is that with pin-headed, leftist academics running the EPA, our the upcoming crisis will morph into a full fledged catastrophe.

The academics of your acquaintence may be pin-headed, Michael, but I wonder how many of them are leftist. Of course, maybe it doesn't make any difference. Since the USDOE has not given us the information we need, I see no reason to expect anything from the EPA.

As for my good self, I would never call academics in the Stockholm-Uppsala region pinheaded. I have never used that epithet. Parasites and charlatans is the expression I employ, and what I would like to know is how did it come to this?Why do so many, with such wonderful educations, know so little.

Incidentally, I am an American citizen and a Democrat, although I intended to vote Republican last year until I discovered that Mr Romney did not want to become president - he just wanted to be a presidential candidate. Well, he got his wish, and maybe I will get mine in the next presidential election.

There was an article in my (Swedish) newspaper this morning about wind. It seems that more evidence is available that it has gone 'floppo' in this country, Good riddance I say, but before I could get out the champagne, I read another 'piece' saying that more wires are to be constructed between Sweden and the other side of the Baltic. The ignoramus writing this thought that this news was great, although apparently he didn't read my new book yet, because as I point out all the talk about Germany switching from nuclear to wind and solar is a crock, and at least until the next election in that country, they are going to buy electricity in the surrounding countries. I hope that I dont need to say what this means for my electric bill.

No real problem with any comments above except the "Leftist" as epithet per Mr. Keller. So what does that make Mr Keller? Clearly a probable "Rightist"? Dedicated to the concept that whatever corporations want is obviously good for everyone? We must all prostrate ourselves to the wishes and whims of the current breed of corporate CEO's and their dedication to raising their company;s share prices for the next quarter as long as they can get their bonus and change companies before any negative consequences set in? Not me, sorry. I'm a committed Centrist who spends whatever spare time available actually thinking through to the long term any positions I'm asked to support.

BTW, my core values are firmly based in the "dustbowl" "dirty thirties" era of prairie western Canada during which my father and mother grew up. If you told some of my uncles that "Greed Is Good" line from the Wall Street '90's they would probably have simply shot you to put you out of your misery, like a horse with a broken leg.

Most academics are liberal. That is a fact. They hold to the belief that the "evil" capitalists are taking advantage of the little guy who is entitled to the ill gotten gains of the dasterddly rich. Class warfare. As for me, the government (aka "central city") is too big and sapping the life out of the economy and the middle class. That makes me an American.

At the risk of stepping directly into the line of fire here I will admit that my politics are left-leaning. However, I don't think you have to be a "leftist" to make the case for regulation in some parts of the economy. Certainly all government regulations are designed to protect the "common good" as perceived by the government of the day.

Regulations can actually promote a more vigorous competitive environment - for example, the anti-trust laws that broke up Standard Oil or more recently Ma Bell. Airlines are very heavily regulated but they compete fiercely and most are privately owned.

In the case of electricity prices my belief is that there needs to be some price certainty when making investments with payout periods of 15-25 years. We are rapidly approaching the time when there will be no peak/off-peak price for electricity but only a windy and calm price, with the windy price being zero or negative due to subsidies and tax credits. That is a recipe for whip-saw price movements that are, as far as I am concerned, irrational. The fact that Texas is raising the ceiling price to $9,000/MW-Hour while at the same time seeing negative pricing 10% of the time makes the case perfectly.

Setting regulations that are embraced by all stakeholders is about as easy as setting house rules for three teenagers. But believe me, from personal experience I know that you DO NEED those house rules.

I agree Davis. At bottom there could be no free market for goods beyond friends and family without a large and complex set of regulations setting out everything from currency values to contract enforcement, piracy protection, personal protection for transport company personnel, rules of competition and a host of other issues. The size and complexity of governments in many ways simply reflects the size and complexity of trade and commerce. People who dream of a coherent society operating in any way comparable to our own but without government regulation are simply that, that is dreamers with no grasp of reality.

A very well presented case Davis. One of the most cogent articles I have read here notwithstanding our illustrious professor Banks contributions\ of course.

At its most fundamental level, attempting to run a modern industrial society on an energy source over which you have no control is not logical. Whether you are for or against wind, solar or other natural energy source the essence of the argument as to whether it is practical or not is in our ability to control it. We can control the flow of water over dams - therefore it is a practical and useful natural source of energy. We cannot control the wind and we cannot control when the sun shines which means that when those plants are not producing electricity something else must be there to take its place thus increasing the capital cost of the installed capacity. You need two plants instead of one.

The political interference in the power industry occurs from both sides of the political spectrum. On the left are those in favor of renewables whatever the economics as long as the wind mills are not in THEIR back garden of course. On the right are those that think the free market is the solution to all our ills. Neither are correct.

Unfortunately this interference is going to land us all with an unreliable and much more expensive grid system. The costs are already making their way to electricity bills everywhere. That is where all costs must end up. The high costs and subsidized outputs of solar and wind plants must be paid for by someone. The costs of nuclear plant delays and the apparent incapability of the nuclear industry to build anything with nuclear in its name on time and on budget always ends up on the electricity bill. Governments may shield consumers by manipulating rates with fancy formulas but in the end it is always the consumer electricity bill that is the source of money to pay for it all.

Consumers seem not to be asking the fundamental question - why should I pay for these political whims and fancies.

The reason that they do pay because (currently) is that there is not a viable alternative and in the general scheme of things electricity at current prices is not that expensive. However those times are going to change. When methane gas fuel cells prices come down to levels where the average household or business can afford them and with natural gas in plentiful quantities thanks to shale gas technologies people will just produce their own. Fuel cells using natural gas are silent, operate on natural gas supplied by underground pipelines that are not susceptible to weather, or trees, or cars knocking the poles down, are at present about 60% efficient, can produce electricity AND hot water (two key ingredients for a happy household), have no moving parts to wear out and use the existing gas service. The price and the technology is not quite there yet but it IS coming and when that tidal wave hits the power industry is in for a big wake up call.

I predict that power generation is not going to be around in 30 years. If the price of electricity keeps increasing as a result of lefties or righties or as is the present case - by a combination of idiots in both camps - the public will just switch them all off. Methane fuel cells will be the catalyst for that to occur.

Illustrious? Did you call me illustrious, Malcolm. If I was really illustrious the parasites and charlatans would never bother me with articles like the one by Professors Hassler (of Sweden) and Stim (of Germany), which a genuinely illustious person will take as an unforgivable insult. Or the one in 'The American Interest' called 'THE MATHEMATICS OF THE MELTDOWN'. which is an insult to everyone speaking the English language,or any other civilized language, and which claims that without 'options 'the world we live in is inconceivable'. By options I am thinking of the stuff I taught in 'high' or 'low' finance, and which EVERYBODY UNDERSTOOD after a half hour or so of my threatening them with failure if they did not understand.

I wouldn't worry about power generation in 30 years Malcolm. In Germany and Japan, the two countries that are dumping nuclear, there will be a breeder reactor on every street corner. How things will be for the others I cant say, but I doubt if the Danes will get the message by then, even though the price of a kW of electricity is about the same as a full day of drinking beer in wonderful Copenhagen.

While it seems probable that we (the USA) will experience local and regional energy distruptions during the next few decades, I don't know that I would categorize that as a crisis. Certainly it will be critical and damaging within the areas impacted. But, since these impacts are likely to be infrequent and relatively constrained geographically, the impacts should be economically quite manageable.

Having said that, we have hardly begun to employ the options already available to us to mitigate these impacts. For example, many States & utilities have barely implement load shiftiing or demand response programs.

Siimilarly, I believe that many analysts underestimate the upcoming impacts of increased electricty efficiency. At the same time, they tend to overestimate the impact of the impending shutdown of certain coal based generation. It is very possible that upcoming relacement of outdoor lighting with LEDs during the next 10 years will largely offset the "lost" generation capacity, particularly if combined with load shifting.

To this should be added the fact that, although renewables are quite variable, they (most notably wind) are increasingly quite predictable. So, although some sort of "capacity" (actual generation or demand response) is needed to backup such variable generation, the predictability increasingly allows it to approach "reliability".

I agree with Malcom that the industry will be much changed over the next 30 years. I would argue that it is the process of relatively rapid and uncoordinated transition from a purely centralized model to a more decentralized / hybrid model (combined with pressure to "de-carbonize") that is at the root of the challenges ahead. That being said, it does not seem likely to me that stationary fuel cells will have a major impact on the residential market within the next 30 years. Technology development and user uptake are slow and the price of nat gas seems likel to increase. (Consider that, even with well proven technology and dramtatic price differentials, much of the Northeast US continues to use oil for heat rather than gas.) Fuel cells do however seem likely to have a major role in applications such as hotels, prisons, colleges, etc. However, I have not seen an analysis of the impact of widespread use of fuel cells in such applications.

Good post Mike - a couple of comments. I agree that brownouts/blackouts will be sporatic and localized (unless Texas goes down!). But I question how much tolerance there would be for any power disruptions, even for a few hours. In the developed world we are pretty spoiled that way. I can imagine a lot of comments making comparisons to the third world if this happened regularly.

Regarding conservation and efficiency reducing demand I agree. However, as we transition to electric vehicles I think charging EV batteries will result in a net increase in demand in my opinion. The energy used by vehicles today is equivalent to the total electricity production in the U.S.

Well since we are predicting the future: the great "man-is-going-boil-the-planet" theory will be found to be vastly (and deliberately) overstated. Those energy production methods that are cost effective, in their own right will, will be used. Central power stations will predominate, some solar in deserts. Not much wind. Not much nuclear (at least in its current form). Not much coal. Lot of very efficient natural gas turbines/combined-cycle plants.

I suspect that the increase in load due to vehicle charging will take an extended period to develop. None of the forecasts I have seen are supportive of a meaningful load increase before 2025. Most indicate that 2035 is a more likely timeframe, or even later. Certainly these forecasts could be in error. Certainly something could happen to dramatically speed up the the adoption rate of electric or full hybrid vehicles. But, at this time the most likely scenario seems to be a slow move in that direction. Longer term you may have a case. However, even there I would argue that much of the initial new load will occur at night, during non-peak time. If correct, rather than threaten the grid, such load will help to balance it and make it a bit more profitable.

If grid failures are widespread or regular, I agree, there will probably be little tolerance. I also agree that under such conditions, the use of "third world" descriptors seems likely. After all, we occasionally hear it now.. Generally I don't believe we will see that during the next decade. Most of the US has adequate reserves, even after the predicted coal plant closings. And, again, much of the US is still making very limted use of demand response, let alone other programs such as co-gen or load shift. If pursued, such programs can be implemented quickly and provide surpirsing amounts of capacity at peak times. Since you seem to be particularly concerned about Texas, I recommend you look at the opportunity for such programs there. (You will find these programs are very lightly used there.)

Also,you used as a concerning example in Texas the dramatic swing from high wind based production to zero (effectively). While this did indeed happen and did impact system stability there are a few other salient points.First, the change in production was due to the passing of a front. As such, the drop off in production was predictable. Modern software used by many system operators can forecast such events and the associated generation with good accuracy even for the next day. Further, simultaneously with the predictable drop in wind was complpetely unexpected loss of major steam generation facilities. An aggressive DR program would have greatly mitigated the risk of these events.

It is certainly desirable to have somewhat more generation iin certain regions. But rather than arguing for more generation resources throughout the US, I would argue for much better management of the resources we already have. Not only does this seem likely to be more cost effective in the short term, it also will help reduce the likelihood of "stranded assets" if fuel cell co-gen or solar pv are actively adopted.

You haven't mentioned the half of it Michael. The dumb energy and environmental ministers of Sweden are going to Dublin to consult with EU morons, and while in their presence make a case for increasing the intensity of renewables in the EU energy structure in order to strengthen the competitive ability of EU countries, which in turn will play a key role in maintaining the standard of living. And yet people like that wonder why the Chinese could end up owning a big slice of the Swedish economy.

However, dumb doesn't mean guilty. It means dumb. The people who are guilty are the people in Sweden (and elsewhere) who tolerate this kind of foolishness in their government. Naturally, it is OK in the class and seminar rooms, because the average university teacher is as hopeless as the fool who writes in the business section of his favorite newspaper.

Michael: "the great "man-is-going-boil-the-planet" theory will be found to be vastly (and deliberately) overstated. " -- evidence please? Ah, but that's right, we both already proved that you have none.

Heating of the planet has hit a "pause" button; the climate models are unable to replicate the past; the models cannot be validated; the underlying data has been "lost"; the specifics of the models are not made public. Need I go on?

A consensus does not equal proof, only agreement by the like-minded. If everybody is in agreement, then folks are not thinking (I believe Patton made that observation).

Ordinarily, a theory has to be actually proved before global acceptance. Curiously, such a basic precept is completely ignored by the leftist green energy religion, as consensus is clearly not hard-and-fast proof.

Kindly note I am making a future prediction, as opposed to stating a fact. You have proved nothing other than difficulty in applying logic.

How do we get politicians and the public to understand the unintended consequences of subsidies? I was amazed that the PTC for wind was extended in the 2012 negotiations and I fear that very few people realize that this tax credit is largely responsible for a drop in the ERCOT reserve margin. I don't think the public understands that a decline in reliability is a natural result of an increase in the use of intermittent resources. Why isn't that part of the discussion? Because it muddies the water. Until we are better able to utilize batteries, or some other storage technology, to optimize the use of available resources we will have to realize that some reduction in reliability will be necessary.

I have gathered the data to look at the storage requirements in the USA based on each of the ISO regions (e.g. ERCOT, MISO, PJM, etc.). The goal of the paper is to look at the MAXIMUM storage requirements for a pure wind and a pure solar solution.

This is not a realistic situation, but should provide an upper limit to the discussions on the cost of storage.

Since storage is driven by renewables, my general feeling is that storage should be included in the discussion of the cost of renewables. One can argue that nuclear and other baseload plants can also benefit from storage, and I think that is a fair arguement.

What I find interesting in all of the markets is that the wind and solar resources are out of sync with demand not just by hours of the day or days of the week, but by whole seasons.

I hope to finish the paper by the IEEE T&D show deadline and present it next spring at the T&D show.

This is a key element that will be a difficult discussion, since the lowest cost, safest storage that exists today is pumped hydro and some environmentalists are already trying to limit the use of pumped hydro to limit fish kills, while also fighting to remove dams from rivers.

A coordinated policy on energy production, storage and use is needed, not only country by country but interconnected area (e.g. Europe) by interconnected area. This is the only way to ensure reliablity and reasonable cost.

The general problem with society today is the desire for simple answers, often to the exclusion of necessary detail, and this is nowhere more evident than with respect to the energy industry. Wind power is a captive of a hunger for efficiency, but focused on the wrong elements. It is true that large horizontal axis wind turbines (HAWT) are more efficient individually than vertical axis wind turbines, (VAWT) but because of turbulent interaction, the spacing between the large HAWTs makes the system demand vast amounts of real estate. VAWTs, on the other hand, can be positioned much closer together, and if planned properly, can even be more efficient than when standing alone. As a result, the VAWT system can be much more efficient per square area than the HAWTs. With the generator element at the ground level, the VAWT is safer and easier to maintain, and they don't kill eagles and bats. The problem is because of a misguided focus on the individual turbine efficiency, the industry is so heavily invested in HAWT technology, it will be difficult to shift to the more practical and cost-effective VAWT systems.

Hydro pumping for energy storage is another misguided focus. Most wind energy favorable areas are arid, so flywheel or pneumatic storage systems are much more practical, even if less efficient.

I have serious misgivings with the concept of a vast, interactive energy grid, primarily for security reasons. With a nation wide grid, it's too easy for cyberattacks to cause large scale blackouts. Synchronizing power becomes more difficult as the size of the distribution system grows. A distributed energy supply, with emergency links strictly for regional power outages makes much more sense, and the resulting smaller networks are more easily managed, being matched to each region's needs.

On a parting note, the climate is changing, as it has for billions of years. Pretending we can somehow create a climate stasis, or thinking that the climate as it is today is somehow optimal are fruitless delusions. One single hurricane produces the equivalent of megatons of nuclear weapon power, so I hardly think any effort we can manage is going to do much to control the weather, or affect the long term shift in the climate. A single volcanic eruption can undo the best reduction in greenhouse gases in a year, which is frustrating, to say the least. Efficient energy production, from the cleanest sources we can manage is a good long term goal, but shouldn't become a suicide pact.

The people whom you label as "leftists", in your blatantly neo-con opinion, are not trying "rob the rich and give it to the poor", nor are they trying to implement any other method of social destruction which would substantially disturb your paranoid beliefs and lifestyle.

The main goal of the centrist portion of this group of "lefites" is to insure the general survivability and welfare of humanity by reducing, and eventually eliminating this one thing:

The ability of individuals and industry to create noxins, toxins, and other destructive wastes, and locally or globally broadcast them upon the unsuspecting and unknowing masses in the cheapest possible way, all in the name of their relentless pursuit of profit, power and socio-political advantage.

Based on the bile contained in your accusations, I would strongly suspect that, at a different point in history, you would have cast similar aspersions upon the people who worked to promote, fund, develop and legislate public sewage systems and waste disposal treatment plants. Perhaps you would have vigorously defended the individual's right to "fertilize" without impairment, the property of your neighbors with your own waste simply because you could, based upon your physical and financial ability to eat copiously and continuously.

With that, I am happy wear your "Leftist" label, because I feel my own "rights" exist within a very small boundary around myself, and I am ethically precluded from enforcing my own freedom to do anything I darn well please as soon as it begins to impact the health or welfare of any of my fellow travellers.

Realistically, all human activity creates some sort of waste, and part of our responsibility to ourselves, our progeny, and our planet, is to do our absolute best to identify the degree of harm those wastes can cause, and to mitigate that harm through management or elimination of those wastes through the judicious application of appropriate technology and policy, from the personal level, all the way up to the global level.

First, Mr. Swan, you say that renewable energy and declining reserve capacity will destabilize the electric grid. Yet in the upper Midwest, we have a surplus of coal-fired electric generating plants that are old, inefficient, and not economic now, let alone with additional pollution control systems. Should we just abandon air quality standards so we can keep 60 year old plants with a net plant heat rate of 14,000 Btu/kWh in service? We need gleaming new, efficient power plants, not whining about how regulation is killing my 60 year old dinosaur. Meanwhile, we have hundreds of simple cycle CTs all over the Country that operate less than 100 hours per year with better heat rates than the old coal plants have.

And then we have Mr. Kelly, who says "Hey, climates are always changing, so who cares if we are changing it now? That's like saying, "Hey, people are going to die eventually, so who cares if we kill them now?" You may not find it so delusional when the climate has changed so quickly that entire forests throughout the world are wiped out, like in our beloved Northern Rockies,because they cannot adapt to climate change as fast as we learned men think they should.

And has anyone ever given the thought to the fact that renewable energy should NOT be considered on industrial scale like conventional steam electric plants? Renewable energy is by definition diffuse, so it makes really lousy central generating plants. But it works great when installed close to the native load, like solar electric on a homeowners roof or on an elementary school. In this way, renewable energy can reduce generation requirements AND electric transmission and distribution requirements. Of course, us big shot electric utility managers have a harder time understanding how we can profit from that, unless of course we get our heads out of our you know what to think about how we could help bring this inevitable future about.

Or maybe we should just turn the clock back so we can just keep going like we did 30 years ago....

It seems to me that we are very short side on this. The electrical industry has used the same basic process for over 100 years (combustion or steam) and no one is even looking at the most obvious. The problem is not that we cant produce electricity for next to nothing the problem is if we so the electric company go out of business. The people that own and control the clerical companies owns, control and contributes large amounts of capital to the politicians that make the laws and controls what will get funded and what wont. The problem is not that there no way to produce electricity for next to nothing. The problem is that the capitalism dose not allow for change. Whoever and whatever technology get to the point that they control the market and the politicians then there is no way any other technology can ever replace it. Our problem is not one of technology but it is our CAPITALIS SYSTEM

I feel that, as with all new technologies which enter large scale use (as opposed to small scale or incidental use), that policy and regulation has to be established to mitigate the effects of a reality I am happy to point out:

"Too much of any good thing, is pretty much guaranteed to be bad thing"

Too many highly variable renewables entering the legacy power grid can be a bad thing, if done in an uplanned and uncoordinated way. That seems to be what the author is driving at.

I would say it is up to NERC and FERC to commission a serious set of studies to model what could happen to the power grid based upon a set of scenarios in both renewable penetration, and climatologic events, and determine worst case scenarios, probabilities, and costs. The a set of GUIDELINES to the regulators in each state should be issued, regarding renewable penetration rates and limits, grid support mechanisms (such as ancillary services and pricing models), and recommended grid infrastructure improvements, which would support the cleanest most reliable system we can reasonably afford.

I have a philosophical question to ask to get people to think about this in a different way. We take two technologies now for granted. One is our electricity, the other is our cellular telecommunications technology. First,compare what you spend each month on each technology... (Me: $204/m on cell phones for the family, compared to $110 per month for electricity) Now, if loss of either were threatened by some random 24-hour period every couple of months, what would I be willing to pay to reduce that probability by 90%? What would I be willing to pay to avoid the threat that each might go away for a week? A month?

People will spend hundreds of dollars in a heartbeat for the latest whiz-bang cell phones, but argue with bulging forehead veins against an additional $5 a month in their eletric utility bill. Yet a reliable electric system is arguably more essential to maintaining their quality of life, isn't it?

We shouldn't have to wait for an essential system to fail before we address the weaknesses that could cause it to fail. Some nominal investment from FERC and NERC, recoverable from the power producers and the rate base, would go a long way to alleviating the concerns that the author expresses. "An ounce of prevention is worth a pound of cure", eh?

As I look out of the window of my lonely room tonight, I see a rainbow. I wonder what it means, considering some of the beliefs in the above comments.

I know what success in the generation of electricity is. I know it because they had it here in Sweden until they started listening to the liars and fools who wanted electric degulation, thought that all subsidies were wrong, said that nuclear should be dumped and renewables promoted, and of course turned the teaching of energy economics over to the dumbest persons in the country. By dumbest persons in the country I am especially thinking of the simpletons who wanted wires made available to receive electricity from Germany, although that country had perhaps the most expensive electricity in Europe, and Sweden had some of the cheapest - if not the cheapest.

The US and Canada are very large countries, and it is likely that things like solar and wind make sense in some regions, but it often happens that persons like the moronic Swedish energy minister are not interested in "some regions", but want the ten remaining reactors in this country leveled to the ground and replaced by windmills (although if you ignore the lies and look closely, and can add and subtract, you would realize that wind is an economics failure in Denmark, though a publicity success),

As for the above article, Malcolm Rawlingson likes it and that is good enough for me to continue liking it.

There are some excellent posts in this thread and a debate is what my blogs try to stimulate.

A couple of comments; regarding Mr. Kelly's remarks on climate change. I have studied climate extensively and agree that we are probably not in a position to control it to any great extent because we fundamentally don't understand long-term (millenium) changes. There is no credible theory as to why we have had ice ages over the past million years. Talk about climate change! Having said that Mr. Kelly agrees that clean energy production is a goal that we should all aim for.

I also want to reinforce that I AM IN FAVOUR of wind, solar, and a 100% complete transition to renewables. We are just not going about it in a sensible way. Richard's call for regulations regarding renewables is spot on. In fact, I think what we should have done is to mandate existing utilities to build out renewables as part of their generation portfolios recognizing and getting public support for the increased costs that would entail. Instead we have done an end-run allowing private developers to make a fast buck by introducing heavily subsidized renewables into the grid in a largely unregulated fashion. The wind lobby is now so strong it would take a lot of political courage to try and reduce or eliminate the PTC or other related direct subsidies. Have you seen a lot of political courage in any western democracy lately? We are still living in an era of deregumania as far as I can tell.

If you want to really understand what a future based on wind would require (and why PV solar is pointless in that scenario) check out the latest post at my Black Swan Blog. http://debarel.com/blog1/?p=158

If you lads want to go into utter hysterics about the climate, "no-problemo". However, kindly leave the rest of us alone until such time as you are able to provide facts that are able to stand on their own two feet. Kindly stop trying to terrorize the population by slinging misinformation, half-truths, distortions and outright lies while ignoring logic, reason, economics and cold, hard science.

Furthermore, your vaunted renewable energy is just a poor solution to a problem that may or may not exist. Renewable energy is too expensive and completely ineffectual at reducing greenhouse gas emissions. Improving the efficiency of energy use and generation is vastly more effective. - and it saves us money!!

Deploy renewable energy when it is cost effective in it's own right and does not turn the grid into a 3rd world power source.

A 100% renewable energy world is just plain dumb as it implies we must have a "zero-carbon" world. There is no rationale scientific justification for such a peculiar position.

Mr Keller. No-one I know of is promoting "A 100% renewable energy world". Perhaps you should learn to burn that straw in a boiler of an electric plant rather than using it to build men in debates. The point is that solar thermal with overnight thermal storage won't become cost competitive with coal until somewhere around 2.8 to 8 GW of it has been built, and economies of scale, volume and incremental improvement kick in. At that point, then IMHO the grid should be supplied by a) about 40% nuclear b) about 20% to 40% central solar thermal with solar or pumped hydro storage c) 20% to 40% distributed Natural Gas fuel cell co-gen with waste heat used for local hot water and heating. d) an infill of local PV as economical.

Of course plans should provide for a possible breakthrough in PV or Optical Rectenna solar, as well as in batteries or etc. for electric vehicles, and the effects of that on the grid. None of this is radical, leftist, or antisocial, just common sense considering that we are presently burning up every year the fuel which took the carboniferous era 1 million years to lay down.

Len, At the Atikokan plant in North Western Ontario, Ontario Power Generation is doing exactly what you recommend. The coal fired boilers will be converted to operate on combustible waste materials from forest products made into pellets. Somewhere I read that waste farm materials (straw?) is also going to be part of the mix.

Bruce Power this week connected the last of its 8 units to the Ontario grid system making it the largest nuclear powered generating facility in the world and producing one third of the Provinces power. This major event has gone entirely unreported by the media. Why is that? Lots of well paid high tech jobs being created for 40 or 50 years. Hundreds of young people being hired to operate the facility.The revitalisation of local communities. Cheap electricity. No CO2 emissions. One would think the CBC would be all over that story....but not a peep.Why?

When I compare the land used for producing 6300 MW of nuclear with the land used for producing a few tens of megawatts by windmills it is clear to me that in order to replace large centralised power plants with any type of renewable energy it is going to cover vast areas of the landscape. That does not appear to me to be a very practical or desirable thing to do.

As a general comment on the theory of CO2 emissions affecting the climate of the earth I wonder why the coldest spring for 100 years in the prairie Provinces is not being attributed to "Global Warming" in the same way that hurricanes now appear to be.

I guess it is difficult to convince the public that CO2 is warming the earth when you are at -13C in April. But then we can take consolation in the fact that it was colder 100 years ago. And of course the weather forecasters did not see this one coming. Why? With all the sophisticated computer models one would think they would have it bang on. Instead of utterly and completely wrong by 20 degrees C or more. Yet many that write here are indefatigable in their belief that computer models can predict the temperature of the earth 50 years out. They appear not to be that good at it only one week out.

My faith in the ability of computer models to predict anything of any consequence is about as great as my belief that the humans entering the data are 100% perfect and never make mistakes. Neither are realistic.

Len - I do know of people that believe the whole world can run on solar and a few in Denmark that think the entire world can run on windmills. Maybe you can run Denmark on windmills but then you can fit Denmark into Ontario about 30 times so its power consumption is miniscule. You could probably run their grid on a couple of car batteries and an inverter.

One of the main problems that all the Electricity system simulations miss is how to model the effect of variable and, to an extent, difficult to predict renewables when operating the system. You need to look at the sequential decision process (Market then Operator) and the resulting outturn Generation, Heat consumption, Fuel burn and emissions. Standard time series (or worse Load duration) definitive schedules wont do thus.

The GB Multi Party Bi lateral trading mechanism will not be running the plant efficiently. Genertation will not be run in strict overall cost order. The per unit excess fuel burn and thus emissions as you pull a fossil unit back from full load increases by a square law.

As regards interruption impact, has anyone got any good links to an analysis of the economic damage in California back in 2000/2001?? As I understand it, after 8 years even Governor Schwarznegger couldn't 'terminate' the debt!!

Malcolm, windmills supply about 25-26 percent of the power in Denmark (or maybe slightly more). The talk about the success of wind in Denmark is one of the biggest lies of all time if you consider the economics. As with Germany, Denmark is in position to buy power from other countries. The question to be asked here is why, if Denmark produces e.g. 26% of its power with wind, they don't produce 27%, and after that 28 and so on. The answer is probably complicated, but a part of it is that the chief windmill maker is in serious economic trouble, and maybe the Danish taxpayers are tired of subsidizing nonsense.

If you want any more information about energy in this part of the world, contact the former top energy bureaucrat in Sweden, Mr Kåberger (PhD in technical physics). He knows as much about energy economics and energy history as I do about Japanese grammar. As a matter of fact he is working in Japan now, telling the Japanese about how to shape up their energy economy with a big commitment to renewables. Naturally, they consider him a fool, but having a Swede talking about things that he knows absolutely nothing about makes some kind of sense for the people who own that country.

As for the non reporting of the Bruce facility, that makes as much sense to me as the non discussion of Mr Obama's insistence on the US now possessing 100 years of natural gas at the present consumption. When you deal in lies and misunderstandings, you have to go all out. or in the words of that great Frank Sinatra song - All or nothing at all. By the way, could you tell dumb me more about the Bruce facility. .

It is interesting that this facility has been "rehabilitated after 20 years of neglect by the crown corporation that was running it previously. It is now being operated under lease by a private concern. To me this is an example where the public-private partnership actually worked to everyone's benefit.

As for Denmark, I have outlined the situation in detail at http://debarel.com/blog1/?p=50 - one other irony about Denmark. Because their windmills are unreliable they end up importing nuclear generated power from Sweden even though Denmark banned nuclear energy decades ago.

When I get some time I want to look very carefully at this Bruce thing, but I know all about Denmark that I need to know. The Swedes should take my advice. Construct another very large nuclear plant and export electricity. The prlice would be the highest in Europe.

One of the predicted effects of climate change is more variance in local climates. Not much will simply trend upward in way which is noticeable to us from one year, or one decade to the next.

Signal to noise is a very low ratio here. Climate change will amplify the high frequency noise, while the base DC signal level (i,e, the average global temperature) gradually but inexorably increases. Our bodies and our brains cannot discern the signal from the noise, but our SCIENCE can. It is our SCIENCE we should be paying attention to, so that we are not deceived by our poor senses in this matter...

You are presuming the climate behaves in an underling known fashion, with CO2 a major feedback of some form. Far too non-linear, chaotic and complicated to arrive at your simple conclusion. Seems to me the best we can say is we really do not know what trajectories the climate will take.

I am not personally presuming anything. I am looking at the summaized evidence, and the quality of the individuals presenting it. Yes, expected non-linearity, and what you characterize as chaotic, technically translates into my observation of a very low "signal-to-noise" ratio. The results of the Rutherford experiment were equally "surprising" until the structure of the atom was redfined to represent something a bit closer to reality, rather than the model which prevailed at the time.

Those results did not disturb our economic status quo at the time, but look at the significance of those observations a mere century later.

We are discovering hundreds of new planets out in the local portion of our galaxy, only through inference, not by direct visual observation. Is anyone claiming that these inferential methods are completely flawed, and that other world's simply DO NOT exist, as a consequence of such flawed methods? I haven't seen any serious outcry, even from the fringe thinkers. Again, why not? Because this information does not disturb our daily status quo, and will not cost us a penny out of our wallet. I again submit that the sources of the skeptical arguments against GW are totally economic, and nothing else, in spite of the overt contrary claims of the skeptic communiity.

You cannot make a mathematically sound conclusions by taking a small snippet of information and then make a broad generalizations, which is exactly what you are doing. Further taking very simplistic work and assuming the climate is similarly "simple" is just not logical

Stop trying to con everybody. We have no idea what the future climate will be and have no idea whether or not man can meaningfully change where the climate is heading.

Fred, Thanks for your interest in Bruce Power. It is a great success story for the CANDU fleet of reactors in Ontario. There were certainly mistakes made when the plant was run by Ontario Hydro however remember also that these reactors were also constructed by that company and the fact that they can be rebuilt to operate for another 30 or 40 or maybe 50 years is testament to the robustness of the original design. Bruce Power also deserves immense kudos for having the tenacity to stick with it over a long period of time. Many one-of-a-kind engineering feats have been accomplished there. All the boilers were replaced in 2 units - first time ever for a CANDU plant. Two units entirely re-tubed (ya cannot do THAT with a PWR), turbines rebuilt from the ground up and the list goes on. My point above that while the media constantly chirps and chirrups and Tweets about the economy creating better high paying jobs is has been almost silent one one of the largest infrastructure projects in North America that not only has created 4000 highly skilled jobs but has completely revitalised an entire community. And the fact that the largest nuclear power facility in the WORLD has just been brought back to full power operation goes completely unreported by the Canadian press seems to me to underscore their obvious bias - even when it is the single biggest reason why Ontario now enjoys cleaner air than it has in the last 40 years. Coal burning has almost stopped in Ontario - and that is because of emissions free electricity from Bruce Power, Darlington and Pickering - and a very very tiny contribution from wind and solar.

For those interested in some facts I suggest you visit the Bruce Power website to see a true Canadian success story.

For those interested in some facts and figures the site has 8 CANDU Nuclear Power Reactors at two plants (Bruce A and Bruce B). The four at Bruce B are rated at just under 900MW while those at Bruce A are rated at about 800MW. All eight units can be automatically refuelled on line Total output is posted at 6300MW. Total amount of CO2 produced - almost zero.

The site is also one of the single most successful public-private partnerships in the world (also completely unreported by the media). The site is leased from the Government owned Ontario Power Generation Incorporated and is a partnerships between Cameco, Transcanada, Borealis Infrastructure, The Power Workers Union and The Society of Energy Professionals the latter two organisations being the Unions that represent site employees.

About $7BN in private funds has been invested to refurbish the site and the workforce has been transformed from an ageing (near retirement) population with average age around 54 to one where the average age is down around the 40-45 mark. Large numbers of young engineers have found well paying high tech work at the site and it is no understatement to say that the entire community has been transformed from worry and concern about their future to total optimism and vibrancy.

Ask anyone in these communities whether they would like another power plant. It will be a resounding yes.

The CEO's of the companies that have shown great confidence in this PPP to deliver and have invested their Corporations' money into nuclear really deserve a lot of credit for their vision. But no doubt they will get very little from the biassed Canadian media.

But don't tale my word for it. Go take a look at the websites and see for yourself. An incredible engineering feat accomplished with no public money by a few thousand very smart young (and not so young) Canadian engineers from all corners of the world.

Richard - I don't agree or disagree with your comments above. The point that I was making is that almost every single media report on the Hurricane Sandy attributed it or implied that it was due to Global Warming. In fact this was a low power hurricane and prior to landfall was only a category 2. I did not see a single climate "scientist" go on record to counter any of this nonsense which has not a shred of evidence to support it. So it seems that single weather events ARE indeed used to support the case where it suits but when it is freezing cold in the prairies in spring time the arguments are never used because people will have a very hard time trying to rationalize sub zero temperatures a with the world (supposedly) getting warmer.

It is this cherry picking of weather events that is particularly trouble some. If your are attributing this behaviour to science I suggest you talk to some actual scientists not glorified computer programmers.

Davis, It is not only Denmark that imports nuclear generated electricity. Germany also is doing the same and increasing Freds electricity bill as well. You should come and live in Canada Fred - its a lot like Sweden but electricity is a whole lot cheaper here.

But Merkel is not against nuclear. She is a politician so her main goal is to get elected. The Danes are the same. Importing nuclear generated electricity from Sweden is politically better than having the lights go out. The latter would cause them to be kicked out of office the former is a bit of hypocrisy but since nuclear generated electrons are indistinguishable from hydroelectric electrons you can also say that it is only the "clean" electrons the Danes are buying. And of course the public laps up that nonsense.

The combination of power that I foresee is nuclear as the main generators with combined cycle gas plants for peaking and a bit of wind and solar in the mix to make everyone feel good. The only technology I see changing that is methane fuel cells since if the price is right individuals will have the means - if they want to - of disconnecting from the grid altogether. That is why it is vitally important for the bulk power industry to get its costs under control and keep electricity prices low so as to remove the cost incentive for moving to a new technology. If the transaction cost is too high (as it is now) there will be no impetus to change. But if technology costs fall (as they will do) and electricity prices rise (as they also appear to be doing) then there will be a cut over point where people will change...and if those flood gates open I'll be buying shares in the gas company.

In the utility sector, the obligatory focus on compliance has traditionally shaped security practices. But as utilities deploy internet of things (IoT) and cloud technologies, new security and compliance challenges are posing significant risks to..

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“Remote technical support played a major role in slashing Noble Drilling’s downtime from 10% to 4% in about a year.”

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